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Friday, June 26, 2015

Supreme Court Upholds Affordable Care Act Subsidy Regulations

The U.S.
Supreme Court announced its much awaited decision today in the case of King v.
Burwell. In its ruling, the Court upheld a key provision in the
Affordable Care Act (“ACA”) that provides government subsidies for health care
insurance for all Americans who qualify, regardless of whether the coverage is
obtained through a federal or state run health care exchange. The Court’s
decision affirmed an earlier decision in the case by the U.S. Court of Appeals
for the Fourth Circuit and endorsed the view of the Obama administration that
subsidies should be available for all lower and moderate income individuals
regardless of where they reside.

The Burwell case
originally arose as a challenge to IRS regulations issued under the ACA in
2012. The IRS regulations provide that subsidies are available under the ACA to
taxpayers who enroll in health care coverage through any exchange,
whether federally or state run. The plaintiffs in Burwell had
disagreed with this IRS interpretation of the ACA, claiming that the IRS
regulations exceeded the IRS’ authority given that the ACA statute itself only
references state-established exchanges in discussing the availability of
subsidies.

In
upholding the IRS regulations, the Supreme Court’s analysis hinged on its
interpretation of the ACA statutory phrase “established by the state.” Chief
Justice Roberts noted that, technically, the ACA statute’s wording was
problematic, but that the Congressional intent to subsidize coverage through
either a federal or state exchange was clear.

The
Supreme Court’s decision avoids a multitude of ACA administration problems that
would have been created had the Court ruled another way. The ACA has not been
without problems, but it has been in operation for five years now and there are
many provisions to which people have grown accustomed, such as access to
coverage with no pre-existing condition exclusions and certain patient
protections. A different result in the Burwell case
could have caused significant disruptions to not only coverage obtained through
the federal exchanges, but also to state run exchanges and other health care
insurance.

The
Supreme Court’s decision was not unanimous, however, and the three dissenting
Justices had harsh words for the majority. They claim the Court’s ruling
represents “somersaults of statutory interpretation” designed to preserve the
ACA. For now, though, the Court’s decision permits employers and
individuals to continue along the path of working to comply with the ACA and
its prodigious body of regulatory and administrative guidance.

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